Sensex, Nifty remain lower in late morning session

Indian equity benchmarks remained lower in late morning session, with both Sensex and Nifty trading in red terrain. Mixed cues from other Asian markets impacted domestic sentiments. Traders remained worried, as fresh rupee denominated bond issuances witnessed a sharp decline of 45 per cent to Rs 1.3 lakh crore in Q1 FY2022 on a YoY and a QoQ basis (Rs 2.3 lakh crore each in Q4 FY2021 and Q1 FY2021), according to rating agency ICRA. At the same time, government's gross market borrowings during FY2022 (including back to back loans) is expected to remain at Rs 13.7 lakh crore, similar to the last year.

Adding more worries, Rating agency Moody's has said the asset quality risks for banks will rise in most parts of ASEAN and India, as the region battles new waves of coronavirus infections amid low vaccination rates. Besides, the Finance Ministry said it has released the fifth monthly instalment of revenue deficit grant of Rs 9,871 crore to 17 states.

On the global front, Asian markets were trading mixed, even after Singapore's gross domestic product expanded 14.7 percent on year in the second quarter of 2021, the Ministry of Trade and Industry said in Wednesday's final report. That exceeded expectations for an increase of 14.2 percent following the upwardly revised 1.5 percent gain in the previous three months (originally 1.3 percent).

The BSE Sensex is currently trading at 54252.28, down by 302.38 points or 0.55% after trading in a range of 54167.20 and 54758.74. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.94%, while Small cap index was down by 2.84%.

The only gaining sectoral indices on the BSE were Metal up by 1.72% and Energy up by 0.09%, while Realty down by 2.77%, Healthcare down by 2.41%, Consumer Durables down by 2.16%, Consumer discretionary down by 1.90% and Industrials down by 1.64% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.02%, Power Grid up by 1.62%, NTPC up by 1.01%, HCL Tech. up by 0.76% and TCS up by 0.47%. On the flip side, Sun Pharma down by 2.31%, Kotak Mahindra Bank down by 2.25%, Bajaj Auto down by 2.25%, Mahindra & Mahindra down by 1.82% and ICICI Bank down by 1.25% were the top losers.

Meanwhile, amid increasing container freights, Trade Promotion Council of India (TPCI) has said this would push the overall cost of domestic goods in the international markets, which would make it less competitive and hurt the country’s merchandise exports. It said that new records have been hit in container freight spot rates of all carriers and further rise is expected this month.

The council said ‘the industry is worried that if this situation persists, there can be a 5 per cent to 8 per cent increase in the cost of goods from India. This will have an impact on exports too due to equipment shortages or shipments will be postponed due to very high ocean rates. Demand for Indian products will slow down due to high cost’.

Quoting Sandip Patel of SLT Food Inc, and a US based TPCI member, it said that during pre-COVID, cost out of India to North America was on average $1,800 per 20 feet container, which has now touched a high of $6,000 per 20 feet container. Patel added that the problem started when global economies started entering lockdown during the first half of 2020, while China was recovering from it.

Shrikant Devhitka, Export Sales Director at Savion Ceramic (Q-BO) too said that the ocean freight cost also kept on increasing after opening of the market from Mundra port in Gujarat to US, which was between $2,000 and $2,200 six month ago and today it has gone up to $10,000 to $11,000. He said ‘Our orders are getting diverted to Turkey and Spain as they are closer destinations to the export market’.

The CNX Nifty is currently trading at 16202.35, down by 77.75 points or 0.48% after trading in a range of 16162.55 and 16338.75. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.58%, Hindalco up by 1.97%, Tata Steel up by 1.90%, Power Grid up by 1.51% and Indian Oil Corp. up by 1.12%. On the flip side, Kotak Mahindra Bank down by 2.41%, Sun Pharma down by 2.28%, Bajaj Auto down by 2.28%, Shree Cement down by 2.12% and Tata Consumer Products down by 1.92% were the top losers.

Asian markets were trading mixed; Taiwan Weighted dropped 202.26 points or 1.17% to 17,121.38, Straits Times trembled 21.72 points or 0.68% to 3,185.64 and KOSPI fell 18.31 points or 0.56% to 3,224.88. On the flip side, Shanghai Composite gained 9.55 points or 0.27% to 3,539.48, Hang Seng increased 55.42 points or 0.21% to 26,661.04 and Nikkei 225 surged 144.23 points or 0.52% to 28,032.38.